Chapter 2 Accountants as Business Analysts. Changing Roles of Accountants in Business

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Mercy Cain
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1 Chapter 2 Accountants as Business Analysts Changing Roles of Accountants in Business - Past; accountants focused on stewardship and reporting functions: kept financial records, prepared financial reports and audits - Now: business intelligence and enterprise resources planning systems have increased the availability of data throughout the organization -> Business Management Support o Act as Business Partners: Strategic planning, process improvement, compliance To perform new roles, accountants must first understand the business as well as the various ways that the business collects data Business Process Documentation Definitions - Business process: defined sequence of business activities that use resources to transform specific inputs into outputs to achieve a business goal - Business analysis: process of defining business process requirements and evaluating potential improvements, involves ascertaining, documenting, and communicating - Business model: simple, abstract representation of one or more business processes - Documentation: explains how business processes and business systems work Purposes of Documentation - Sarbanes Oxley Act of 2002 made documentation essential for businesses o Assess and attest to the business s internal control structure and procedures o Annually evaluate whether ICFR is effective at providing reasonable assurance and to disclose its assessment to investors o Requires external auditors to audit management s assessment of effectiveness - Documentation important for: o Training: user guides, employee manuals, operating instructions o Describing current processes and systems: supports internal and external audit requirements, establishes accountability and standardizes communication o Auditing: documentation provides audit trails, helps determine effectiveness o Accountability: checklists, delegations of authority, similar assignments of responsibility o Standardized interactions: describes the inputs and outputs of business processes o Facilitating process improvement: Effectiveness Efficiency Internal control Compliance Value of Business Models - Allow us to depict the important features of business processes and systems clearly and concisely

2 o Suited for planning business transformations because it allow managers to assess what needs to be changed Mergers, acquisitions, offshoring, product innovation, and continuous process improvement Manage complexity, elicit requirement, reconcile viewpoints and specifies requirements Types of Business Models - Business process models need to describe process activity, data structure, and business rules that constrain and guide process operations - Activity Models o Describes the sequence of workflow in a business process Ie. flowcharts used to analyze business processes and design changes - Structure Models o Create a blueprint for the development of a relational database to support the collection, aggregation and communication of process information - Regardless of modeling, specific workflow models must be able to describe: o Events that start, change or stop flow in the process o Activities and tasks within the process o Sequence of flow between tasks o Decision points that affect the flow o Division of activity depending on organizational roles Business Process Modeling Notation - Employed for activity models - Method of illustrating business processes in the form of a diagram similar to a flow chart Building Blocks for BPMN Diagrams - Events include start, intermediate and end events o Intermediate events affect flow of process but do not start or end it o Basic events are modeled as small circles o Start events have a single thin line circle o End events have a single thick line circle o Intermediate events have double thin line circle - Activities represent specific steps in the business process o Basic are modeled as rounded rectangles o Each activity is described with a short verb phrase o Can depict a single action or some logical combination of actions depending on the required level of detail to achieve the objectives of the business process analysis - Sequence flows are represented by arrows to indicate the progression of activity within the process - Gateway shows process branching and merging as the result of decisions o Basic gateways are depicted as diamonds (usually appear as pairs) - Annotations allow the modeler to add additional descriptive information to the model

3 Example of a Business Process Diagram - Figure 2.3 illustrates a simple business process activity diagram showing the checkout process at a retail store o Customer presents items for checkout o Clerk scans items and identifies payment method o Payment is accepted and process branches merge o Clerk bags items for customer and process ends

participating in a process o Organization is identified by a pool and department is identified by swimlanes within

4 Identifying Participants in Business Process Diagrams - Participants include people, systems, organizations and machines - BPMN provides notation to identify both the organizations and the department or individual actors participating in a process o Organization is identified by a pool and department is identified by swimlanes within the pool o Every diagram contains at least one pool but if there is only one pool, the pool may be presented without a boundary

Messages in BPMN - Represents exchanges between 2 participants (pools) in the same process as message flows o In a sales process with a customer pool and store pool, customer order would be

5 Messages in BPMN - Represents exchanges between 2 participants (pools) in the same process as message flows o In a sales process with a customer pool and store pool, customer order would be represented as a message flow o Activities within a pool are organized by sequence flow but interactions between pools are message flows (dashed arrow with a small circle at starting end) Best Practices in Preparing BPMN Diagrams - Primary objective of process activity modeling is to describe important steps in a business process clearly, concisely and accurately - Modeling best practices: o Focus on one business process at a time o Clearly identify the events that start and end the process o Include essential elements but avoid distracting detail o Think about a token flowing from start event through the process to end event; flow of token should be clear for all paths through the process o Label activities clearly with a verb and an object o Model iteratively, getting feedback to improve accuracy and clarity 1. Chapter 2: As users, managers, designers, and evaluators of technology and technology-driven business processes, accountants must understand the organization and how organizational processes generate information important to management. To ensure that processes and systems are documented and to participate in improvements to processes and systems accountants must also be business analysts. This chapter defines business process modeling and describes how it supports the roles of accountants. It explains the potential value of business process modeling. Finally, it describes the types of business process models and introduces basic modeling tools to guide the student s development of modeling skills. Discussions Questions: D2, D3

Discussion Questions Ch1 D2 - Cost of the CD, the revenue and cost - Data can create information through reports, meaningful - Knowledge (how much supply level to purchase, which location - 2.

6 Discussion Questions Ch1 D2 - Cost of the CD, the revenue and cost - Data can create information through reports, meaningful - Knowledge (how much supply level to purchase, which location - 2. How could a BPMN activity model support the Accounting/Finance Operations roles shown in Table 2.1? - Easy to read way for analysis purposes because it illustrates business processes in the form of a diagram - Provides a standard notation that is readily understandable by management personnel, analysts, and developers 3. Compare BPMN activity diagrams with flowcharts and DFDs. What is different? What is the same? When would one notation be better or worse than another - DFD is a graphic representation of flow of data through business processes - 5 symbols - Logical aspect of action - Shows flow of data - Know your data inputs and outputs

7 - Flowchart is a graphic representation of flow of data through an information processing system - 3 symbols - Physical aspect of action - Shows flow of control - One direction (where to start and where to end) - BPMN have more symbol, express more - Business Process Modelling Notation

8 Appendix A: Flowcharting What is a Flowchart? - Like business process models, flowcharts are visualizations of a process activity - UML activity diagrams and BPMN are extensions of flowcharts o Useful tools for systems development, process documentation, and understanding internal controls o Three types of flowcharts: System flowchart: provide an overall view of a system, including the inputs, activities and outputs of the process Process maps: basic set of flowchart symbols to provide a representation of the steps within a business process similar to business process diagrams Document flowchart: flow of documents Basic Building Blocks for Flowcharts Example of Business Process Flowchart - Figure below shows a simple business process activity diagram showing the checkout process at a retail store - Customer presents items for checkout, clerk scans and identifies payment method - Process branches depending on nature of payment - Once accepted process branches merge and clerk bags item, ending the process

9 Showing Responsibility - Deployment flowcharts show both sequence of step as well as organizational responsibility - Like BPMN, uses swim lanes to represent different organizational units or functions - Useful in documenting processes for activities such as employee training

Showing Opportunity - Separates value added from cost added activities within a process -> use swim lanes to separate Data Flow Diagrams What is a Data Flow Diagram (DFD)?

10 Showing Opportunity - Separates value added from cost added activities within a process -> use swim lanes to separate Data Flow Diagrams What is a Data Flow Diagram (DFD)? - Represents graphically the flow of data through a system, such as one or more business process - Used to perform structured system analysis - Use limited set of symbols and are easily read and understood - Unlike most flowcharts, DFDs specifically represent datastores; system files affected by or supporting the process - DFDs have no start and end symbols and present the external sources for data Basic Building Blocks for Data Flow Diagrams - Processes are activities that use or generate data, depending on software tools used to draw DFDs, processes may be represented with circles/ rectangles with rounded corners - Terminators are external entities that are either sources or destinations - Data stores represent physical or electronic repositories - Data flows represent the flow of physical or electronic data Example of a DFD - check out process: customer (external source) presents items for checkout; system includes scanning and bagging and accepting payment while updating sales and inventory records

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Chapter 02 Accountants as Business Analysts Answer Key

Chapter 02 Accountants as Business Analysts Answer Key True / False Answers 1. Accountants now face a challenge of helping businesses optimize processes. Answer: True Learning Objective: 02-01 Describe